The Journal gets some sharp critics on the record but undermines that by granting anonymity to board members to talk about how “very comfortable” they are with their independence. Either they can go on the record or they can not be quoted. The Beast writes that Murdoch’s stacked board shows how “at News Corp., despite an org chart that spans continents, oversight is concentrated at the very top—and even there, it isn’t very thorough.”

But Geoff Colvin of Fortune wrote the best piece on News Corporation’s board a week ago, and it’s worth revisiting it.

Colvin gets to the heart of why Rupert Murdoch has ultimate responsibility for what happened at the News of the World: News Corp. is Murdoch and Murdoch is News Corp.—there’s no separating the two (the fact that Rupert himself recently said the exact opposite is all the assurance you need of that).

Some people aren’t at all surprised by the unending scandal at Rupert Murdoch’s News Corp. They are the investors, insurers, lawyers, and others who had read the “Governance Analysis” report on the company from The Corporate Library, a research firm. The firm grades companies’ governance from A to F, and for the past six years News Corp. has received an F — “only because there is no lower grade,” says Nell Minow, who co-founded The Corporate Library in 1999 on the premise that governance “can be rated like bonds, from triple-A to junk.” News Corp.’s overall risk, says the prophetic report: “very high.” Risk of class-action securities litigation: “very high.” Scandal-related lawsuits are already piling up.

For those who think corporate governance is the concern of prissy do-gooders who don’t understand real-world business, News Corp. (NWS) is the latest example that the truth is just the opposite: Governance is the foundation of real-world business. If it isn’t solid, trouble is inevitable. For News Corp., it’s the reason the trouble is far from over.

This is yet another serious reason why News Corp. should never have been owner of The Wall Street Journal, the world’s foremost press watchdog of pesky issues like corporate governance. As Chief Dean Starkman wrote way back in 2007, “News Corp. Can’t Cover the U.S. Business Story” because “It is the story.” Dow Jones, because of its own dual-class stock structure, could not be a paragon of corporate governance. But it did its best, as Dean wrote:

… former Dow Jones executive and director James Ottaway said the controlling Bancroft family avoided even taking on debt because they didn’t want the Journal to appear beholden to financial institutions it covered and wouldn’t own TV stations because they didn’t want the company to appear before any regulator.

Try to imagine those fussy little concepts ever crossing Murdoch’s mind. This is a guy who called one of his Australian editors a “wanker” for asking whether Murdoch’s Sun abided by any journalistic ethics, writes the editor, Bruce Guthrie, in The Age, part of the 30 percent of the Australian press that Murdoch doesn’t own:

IN 1988, while attending a conference of News Corporation editors in Aspen, Colorado, I made the mistake of raising the thorny issue of journalistic ethics. The proprietor, Rupert Murdoch, was not amused.

In short order, Murdoch, who was hosting the session, turned red, then purple, as I repeatedly asked a senior executive from his London paper The Sun whether the publication had any ethical framework. It didn’t, the paper’s news editor finally admitted. In most media companies that admission might have earned the executive a rebuke. But instead, I copped it, with Murdoch later dismissing me as a ”Fairfax wanker.”

News Corp. has grave and endemic cultural problems that reflect on Rupert Murdoch because as a 53,000-person corporate entity, its entire reason for being is to reflect, imitate, and amplify Murdoch himself, which is how one man ends up wielding such outsized, globe-spanning power. This is where you should pause, open up a new tab, and read Jay Rosen’s Guardian piece articulating how Murdoch uses his news outlets as lobbying arms. Here’s the money quote:

Here’s my little theory: News Corp is not a news company at all, but a global media empire that employs its newspapers - and in the US, Fox News - as a lobbying arm. The logic of holding these “press” properties is to wield influence on behalf of the rest of the (much bigger and more profitable) media business and also to satisfy Murdoch’s own power urges.

This is why Murdoch’s empire, particularly in the UK, was so dangerous, but also why it was more fragile than any of us could have imagined. It could get away with many things while its owner was willing and able to use his publishing outlets as blunt instruments to scare politicians and to demagogue public opinion. But wielding power doesn’t win many real friends. When the Milly Dowler gap appeared in Murdoch’s lines, it was in fact many of his putative allies who were first into the breach.

My own little theory is that Murdoch was like an invasive species with a selection advantage of unbridled aggression—something like a hammerhead let loose in the koi pond. The swaggering-but-resentful Aussie thing is certainly part of that, especially given the sclerotic, inbred nature of elite society that we are witnessing in the UK (a fun side note: remember when David Brooks said that was an awesome thing? That was two months ago). But it’s also that Murdoch just never bought into —indeed, he sneers at it—the ethical edifice that journalism as an institution built up over the last half a century or so. He’s hardly the only one, but few so aggressively laid bare their disregard for standards, both journalistic and societal. Journalism should question and challenge power structures and elite opinion. One paradox of Murdoch is that his business innovations have done just that, while his journalism has been subverted to corporate ends. Few, can say with a straight face that Murdoch’s influence hasn’t mostly been corrosive, both for journalism and for society. His disregard for the standards of both was his biggest competitive advantage.

I don’t know what you can do about that other than report it out, as Nick Davies and The Guardian, to their everlasting credit, have done. That, and hope that everybody eventually catches on. (Isn’t it surprising that after all that’s been written about Murdoch, it will be investigative reporting that does him in? Not to us.) The great irony of Murdoch is that the insurgent himself became entrenched, and did nothing other than seek to further entrench himself in the power structures. But demagogues and other entrenched powers eventually overreach and collapse, especially when given a good shove by a free press and democratic institutions, or else they just wither away. It may take way too long, but it will happen—and it appears to be happening here so far.

For Colvin, writing from a very Fortune point of view, News Corp.’s collapse was an inevitable result of its corporate governance structure. That’s, of course, a symptom of the core problem at News Corp., which was Murdoch’s drive to wield power, damn the rules. But it’s also revealing about the company’s ethos.

While Murdoch owns just 12 percent of the company’s shares, he retains control of the company via supervoting shares that give him 40 percent of the votes. It’s technically possible for the other 60 percent of voting shares to overthrow him, but it’s realistically unfeasible, particularly because Murdoch’s close Saudi ally Prince Alwaleed controls 7 percent of the votes, as Colvin points out.

Dual-class structures are not uncommon in family businesses gone public, allowing them to cash out shares while retaining control of the firm. They’ve been especially common in the news industry.

The Sulzbergers control The New York Times, the Grahams control the Washington Post, and the Bancrofts controlled The Wall Street Journal with dual-class structures. It’s no accident that our last best papers were protected under such ownership structures.

Still, let’s face it, some families are better stewards than others. When The New York Times got in real trouble a couple of years ago, the Sulzberger family killed the dividend that helped line its pockets. The Bancrofts strangledThe Wall Street Journal, insisting on $83 million a year in dividends in good times and bad.

Combine an antidemocratic voting structure with a board composed to keep it under Murdoch’s rule, and you get a corporate governance nightmare. You get a NotW. Colvin:

Ultimate responsibility for protecting News Corp.’s 48,000 total shareholders thus rests with a board comprising three directors named Murdoch (Rupert plus sons James and Lachlan; daughter Elisabeth is scheduled to join next year), four additional News Corp. employees (COO Chase Carey, CFO David DeVoe, executive VP Joel Klein, and senior adviser Arthur Siskind), two former News Corp. employees, and seven other directors, including a 31-year-old opera singer, Natalie Bancroft, from the family that owned Dow Jones, which News Corp. bought in 2007. News Corp. says her “youth” and “female perspective” bring value to the board. Under such guardianship, it’s unsurprising the stock has disappointed investors; it has underperformed the S&P 500 over the past five and 10 years…

The effects are insidious and more far reaching than you might imagine. “It creates a culture with no accountability,” says Charles Elson, director of the University of Delaware’s John L. Weinberg Center for Corporate Governance. In companies where directors are genuinely subject to the shareholders’ will, CEOs get fired; BP’s (BP) board fired Tony Hayward last year, for example, and Hewlett-Packard’s (HPQ) board fired Mark Hurd. The message cascades down through the organization: Bad behavior gets you fired here. But at companies where the CEO can fire the board, a different message cascades down: We don’t answer to the shareholders, we answer to just one person. It’s the rule of man, not the rule of law.

Is this an overreach by Colvin? Read this and see what you think:

To see the results, consider the most infamous scandal companies of the past several years - Enron, Worldcom, Healthsouth, Adelphia, Parmalat. Like News Corp., each had risen from nothing to huge success under one man, and through various means he had maintained total effective control. Employees felt they were beholden to a person who was beyond outside governance. The results were devastating to shareholders, employees, customers, suppliers, and communities.

While this is anecdotal, certainly, and it leaves out companies like Tyco and the mortgage-bubble predators, it’s fascinating all the same. Combine it with the goings on at its UK newspaper arm, the coverup facilitated by his executives, including his son, the sordid tale of News America, and the corruption long documented in Murdoch’s behavior with despots like the Chinese, and the bigger picture emerges.

And it’s ultimately why Rupert Murdoch can’t—and won’t—escape responsibility for the crimes of his underlings.

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